Andrew Cho.NET

When you don’t lock down the hardware it’s very hard to make the UI perfect. Which is why Apple’s Macs, with locked down hardware, have always been a better experience than the hugely hardware-flexible Windows operating system.

-Michael Arrington, TechCrunch from his blog post on 6/16/10.

So, it’s been a week since the iPad replaced my laptop as the official gadget of choice to bring to school instead of my laptop. Amazingly, the iPad has let me do whatever that I’ve been doing on my Macbook Pro very well and I believe that it will continue to do so, unless I need my laptop for other reasons, such as heavy coding or word processing.

On my last post, I talked about how the iPad is going to repeat what the iPod has done in the music industry; it single-handedly killed the old-fashioned buy-the-entire-album-to-listen-to-just-one-good-song-that-is-worth-listening consumption pattern and allowed music listeners to pick and choose whatever song that they wanted to listen to.

So this time, I’m going to talk about what the iPad is going to do in software development industry, specifically those small independent developers who traditionally lacked the means to distribute their software, publicize their newest innovations, and make adequate amount of money to compensate for their effort. But this is about to change. In the next paragraph, I’m going to talk a little bit about economics, which may be boring but I promise it will be worth reading.

As it is very common in many developed countries, it is not very hard to find huge companies dominating one industry with their $$$ and PR power to influence the market  in whatever way they want. In economics, we call such practice oligopoly. And we all know (at least, should know if you’ve taken econ 101 back in college) that oligopolistic practice causes what is called deadweight loss through less production of goods at higher price, thereby reducing the amount of consumer surplus and producer surplus. As a result, the economy loses a significant amount of welfare that could have been produced had the market been competitive as illustrated in this graph.

Now, because the iPad gives independent software developer, who tend to be more creative and can produce innovative products faster than giant companies, a platform to compete on the same level as some of these bigger companies with more manpower and resources, it changes the entire market into nearly perfect competitive market. Consumers have the option of selecting whatever they need at a cheaper price because of the availability of numerous new applications that fit their needs. It effectively decreases the average price of software, previously dictated by some corporate giants and increases the quantity of available software by driving the number of software developers in the market, and minimizes the deadweight loss caused by oligopolistic market system in software industry.

In conclusion, the introduction of the iPad is a good news for both consumers and society because they’ll earn more from it as a whole. Yeah, some may say that this empowers Apple to become the next dictator in software industry but at least they are producing amazing user experience and share this new opportunity with everyone, unlike some companies.

Apple‘s latest and hottest product, the iPad just hit the stores yesterday. As it is the case for most Apple products, whenever Steve Jobs announces the latest innovation in Apple’s product line, so many doubtful customers (usually the ones that have no idea what they’re talking about but love to show off their ignorance)  talk so much nonsense all over the place that I’ve decided to clarify a few things and enlighten theses poor bastards.

The biggest complaint that I hear from people around me is that the iPad is just a bigger version of the iPhone. Now, I can’t even begin to tell you why such statement is absurd but let me just explain to you why the iPad is not just a blown up iPhone.

First, take the iBooks app and the Kindle app for the iPad. As most of you know, these applications let users purchase books and store them directly onto the iPad. Some may say, “I prefer to have a real book made of paper and ink”. Now, that doesn’t matter. As witnessed by the music industry, contents, whether they are music, pictures, songs, or films, are bound to become cheaper and cheaper over time. It is a basic economic principle that consumers will find their way to get their hands on the contents that they consume in the cheapest possible way without compromising quality. These two books applications mark the beginning of cheapening content in publishing industry. Yes, it is the rise of cheaper, higher quality digital content that will shake the publishing industry’s traditional business model. It will give power to numerous independent writers just as the iPhone and the App Store empowered independent programmers.

This is a good news for independent writers and publishers as they now have more opportunities to communicate and spread their ideas in effective ways by distributing their work as digital content over the Kindle app and the iBooks app. The iPad is like Guttenberg’s printing press that revolutionized the publishing industry back in 1436, and marks the end of 600-year-old paper and ink publishing. The iPad is the very epitome of the process of creative destruction preached by Joseph Schumpeter.  The market will NEVER be the same again.

The rise of independent writers that can deliver their products directly to consumers will turn the oligopolistic publishing market into competitive market, thereby maximizing consumer surplus and minimizing deadweight loss caused by oligopolistic business practice. The oligopolistic publishing industry, which have been dominated by a few mega firms, will have to adapt to the new free market perfect competition business model that will arise in the near future, thanks to the iPad. In conclusion, the iPad will be the only device that will be remembered as the gadget that single-handedly brought down the publishing industry.

This is just one effect of the iPad will have on the existing market. Now, I dare you to tell me that this product is still a giant iPhone.

I learned something important from networking at Twiistup 7 and would like to share this with everyone. I met the founder of Baduku, an opinion engine similar to Aardvark or Hunch. He majored in sociology and told me something very different from what other entrepreneurs have told me in the past. He said that “Every event, historical or current, has two sides: ethnography and numbers. And through founding Baduku, I’m trying to accomplish both.”

So I’ve been TAing for my school’s web startups class and online marketing class for the past two months and I came to realize something.These brilliant students, many with game-changing ideas, when they share/present their ideas, vast majority of them seem to have trouble delivering the core value of their product in a simple form.

For those of you who have seen any video clips from Ted Conference, or Steve Jobs’ presentation, you know what I mean by ‘delivering core value in a simple way”. Personally, I had trouble simplifying my own ideas because I tried to accomplish too much in too little time. And it only accomplishes one thing: CONFUSING YOUR AUDIENCE.

When you give a presentation, just remember that there should be two things that you should pay attention to.

First, Numbers. Your facts and figures that you present should be accurate and cited from respectable/trustworthy sources that others can look up immediately. Making stuff up just to impress your audience will only get you so far. Be concise and clear as to why you are telling them about these numbers. Remember, relevance is the key.

Second, Story. Your presentation should be like a concert. Your facts/figures/numbers should coordinate beautifully with the story that you’re telling your audience. For instance, tell your audience how a day in your customer’s life is going to become different by using your product/service. Support your speech with believable sources/facts/numbers.

Again, why do we have to learn sociology? Because every event has two sides: ethnography(stories) and numbers. You don’t have to be the best presenter to become a successful entrepreneur. But ,those who can combine the two, are more likely to WIN.

If you are not good at public speaking or want to become a better speaker, sign up for Toastmasters. I already did.

Yes, for those of you who are familiar with the title, I just finished reading the most important chapter in Capitalism, Socialism, and Democracy by Joseph Schumpeter, The Process of Creative Destruction.

This chapter was the reason why I borrowed this 60-year-old book in the first place, and I have to admit that Schumpeter is now one of my favorite authors/economists. The book is very difficult to read, so if you have no previous experience in economics, I do not recommend it because the book uses many economic jargons in it.

Anyway, Here is the summary of the chapter:

Capitalism, in its essence, is an evolutionary process. It is by nature a form or method of economic change and not only never is but never can be stationary. And this evolutionary character is not due to mere increase in population or capital, but due to new consumers’ goods, new methods of production or transportation, new markets and new forms of industrial organization that capitalist enterprise creates.

Capitalism  revolutionizes the economic structure from within, destroying the old one, and creating the new one. It is truly an organic process of industrial mutation, and this process of Creative Destruction is the essential fact about capitalism.

Some people may think that capitalist economy is dominated by monopolists and oligopolists but in reality, the constant introduction of new technology, commodity, sources of supply, and type of organization strikes existing organizations at their foundations and their very lives. Thus, in the long-run, capitalist society, by nature, ends up operating in a very similar fashion to perfect competition, in which all producers produce at “socially optimum/desirable”  or profit-maximizing output.

What is truly amazing about this book is that it is written in the 1940s. Schumpter accurately predicted 60 years ago that whoever creates a new market and introduce new technology will keep the capitalist engine in motion and this exact phenomenon had been happening in the Silicon Valley since the 1970s. Apple and Microsoft redefined and pioneered the personal computer market and Google successfully revolutionized the search market. Intel created a market for CPU and mobile computing; Facebook and Twitter are both restructuring social networking as enormous businesses.

There is no longer a specific market for each product that companies produce. For instance, Apple’s iTunes is no longer just a music player but also an online market for music, movies, TV shows, and the App Store for iPhone and iPod Touch. Microsoft not only makes Windows OS but also Windows Mobile, Microsoft Office, and the newest contestant to Google search, Bing. Google recently showed off Android 2.0 for mobile phones and the App Store for Android phones.

In capitalist economy, where continuous destructions and creations of products and markets occur everyday, it is very important for entrepreneurs to remember that, whoever defines or creates a new market for their products and utilize relevant technology to promote them, will be the new KING.

And, this is why I believe that capitalism and American economy will continue to prosper for many years to come:

The evolutionary character, the incessant innovation and the Process of Creative Destruction embedded within the idea of capitalism will continue to improve the standards of living for many as it has been for many decades.

“Innovation is the source of a country’s “structural dynamism” and is the root of just about everything good, like growth, employment, and prosperity. What the American [economic] system is good at is..coming up with innovative ideas that are economically feasible.”

-Edmund S. Phelps, Economics professor & Nobel laureate, Columbia University

Capitalism, Socialism, and Democracy

So I picked up a copy of this book called Capitalism, Socialism, and Democracy by Joseph Schumpeter.

It’s an old book originally written in 1946.

Here is what I’ve learned so far from the first section, The Marxian Doctrine.

On p.26 cited in his(Marx’s) Theory of Exploitation:

“What he (Marx) wanted to prove was that exploitation did not arise from individual situtations occasionally and accidentally; but that it resulted the very logic of the capitalist system, unavoidably and quite independently of any individual attention”.

Interesting? huh?

I just had a small conversation with some guy who was taking care of his mother at Subway today.

His mother’s had Parkinson’s since ten years ago and moved in with him since then.

He quietly fed her lunch and patiently waited until she was done eating. It was so random but one of the most touching moments of my life. It reminded me of what it meant to be part of a family again.

Call your parents today, people. Tell them how much you love them NOW.